The Analyst

The Thesis

Macau is the hotter market that Singapore for casino investors thanks to its much larger size and higher growth potential, according to Liu. With Las Vegas Sands shares down more than 30 percent since June 1 on trade war fears, Liu says there’s simply too much potential upside in the stock to ignore. While she prefers the Hong Kong-listed Sands subsidiary Sands China, she said risk/reward balance on the parent company is skewed to the upside.

“In Macau, despite the typhoon, we think strong non-gaming offerings coupled with the hotel inventory will allow Sands to disproportionately benefit from the summer holidays,” Liu wrote in the note.

One of the major wildcards for Sands and other casino operators in Asia is the recent legalization of casino gambling in Japan. After attending Dynam’s recent Japan Gaming Tour event and meeting with a member of Japan’s LDP party National Diet representative, Liu said casino investors will likely start getting bullish headlines out of Japan in summer of 2019. Liu expects announcements on location and selection criteria following local elections in April.

Las Vegas Sands CEO Sheldon Adelson has called Japan the “ultimate business opportunity.”